Central Bank fails to stem Iraqi dinar’s weakening vis-à-vis the dollar

By Zeena Sami

Azzaman, April 17, 2012

Despite the sale of hundreds of millions of dollars in the past few weeks, the Iraqi Central Bank has failed to stall the dinar from depreciating.

The dinar has lost about 11 percent of its value against the greenback in the past few months, falling to 1300 from 1l66.

Since the dinar started falling, the Central Bank has been issuing one statement after another to calm markets by boasting its massive hard cash reserves estimated at $60 billion.

But the claims of high reserves have failed to calm markets with the demand for the dollar surging by almost every day.

The bank currently holds the so-called dollar auction every day in which up to $200 million are made available for purchase at the official rate which is now set at 1200 dinars for a dollar.

But the dollars are snapped before the end of the working day with many more traders willing to buy.

There have been various explanations for the bank’ failure to stem the dinar’s fall and meet demand for the dollar.

Central Bank officials warn that if the demand does not drop in the near future it might not be possible for the bank to satisfy needs for the dollar.

“If the huge demand for the dollar continues this will mean that our massive reserves will become meaningless,” said Deputy Central Bank Governor Mudher Saleh.

It is not clear for how long the bank will be able to auction nearly $200 million every day.

Some analysts describe the surge in demand for hard cash in the country as a “bubble” which will disappear once right conditions are in place.

But Saleh was said the “unprecedented demand” was mainly fueled by “other countries’ economies which are facing trouble due to sanctions.”

He did not name any country but it was clear that he was hinting at both Iran and Syria, the two countries which are currently under stringent trade sanctions.

“Iraq has become like a market financing neighboring states and there seems no bottom to the demand for its hard cash,” he said.

Central Bank’s Governor Sinan Al-Shabibi blamed other factors besides the economic difficulties Syria and Iran are facing.

He said the Iraqi economy was almost solely dependent on one source for its hard cash, namely oil sales.

“Productivity is almost negligible in Iraq, there are almost no exports other than oil and there are no procedures or policies to attract foreign investments,” Shabibi said http://www.azzaman.com/english/?p=41

Although dated from the 17th this is good news...rv the darn iqd already before something bad happens!

Come rv!

One should think that this news would be a huge hint for Iraq, don't ya think?

Seems to me their banking and currency is in BIG TROUBLE if SOMETHING IS NOT DONE...and this is not fake intel...it says it right there in fine PRINT!

Isnt the Dinar of more value if compared to the Dollar if it's going from 1300 to 1166?

No, it should be going the other way- At 1166=.86, $3.50=0,285,$7.00=0.142,$9.00=0.111, and so on and so forth-

THESE GUYS HAVE SO MANY THINGS THAT SAY IT NEEDS TO BE DONE ..WHAT WILL IT TAKE FOR THEM TO ACTUALLY DO SOMETHING ?/???

TIMSTERS wrote:THESE GUYS HAVE SO MANY THINGS THAT SAY IT NEEDS TO BE DONE ..WHAT WILL IT TAKE FOR THEM TO ACTUALLY DO SOMETHING ?/???

That is the question i keep asking myself.

This makes me ask,

Wonder what Dr. Shabibi is thinking about as inflation keeps going up, I seem to remember a number like 10%?

That is right, 1Alaskan- Good memory!! As I recall, Shabibi did not want it to get that high, let alone higher-Am I correct in this observation?

That is the number I remember from last summer, I do think I read it in one of his speaches.

Last fall it started to go up and there were news pieces about it and since the first of the year, a bit quite on inflation.

It's going to get worst.

Well,

The good Dr. stated anything over 10%, the CBI would have to step in and do something, at this point in time, what else does he have left in his quiver?

I also read that it is almost 20% or higher right about now, could get alot higher in the coming months-Not good for things that we are looking for-They need to do this NOW, or like Punisher said, It will get worse-

He should probably use explosive arrows to knock it down to where it is acceptable to the country, and the people involved-:!:

Nah, all he has to do is RV. One simple, easy (it would seem so), quick nod of the head, flick of the wrist with pen in hand, smile and presto --- inflation goes away, chapter 7 goes away, World Trade Org. kicks in, and international trade is reinstated. Hmmmmm, what's so hard about that?

If he wants is own country to fail then he and the C.B.I. should continue doing what they are doing...NOTHING!

You are right,Aksafeone- I didn't look at that aspect of it- I'll take an RV anyday-

You are right punisher - THEY ARE DOING NOTHING, like they always have.

aksafeone wrote:You are right punisher - THEY ARE DOING NOTHING, like they always have.

They might as well have left sadam in power.

It would appear so.